The cotton market suffered from a dearth of news again Friday, but given the negative nature of recent reports out of China, as well as the weekly USDA Export Sales report Thursday, that may be a blessing in disguise for bullish ICE traders. Still, the ongoing price decline is no laughing matter to bullish traders and producers.

The market clearly rallied in late 2012 and early 2013 on ideas that the global cotton situation outside China would prove very tight, especially if that country continued its policy of buying aggressively in order to support its domestic market. For whatever reason, the wheels have apparently come off that bandwagon.

That conclusion is based almost entirely upon the July futures chart, since the nearby contract has clearly violated technical support this week. The break seemingly started on Monday when July prices failed to top chart resistance associated with their 40-day moving average for the third time since late April, then closed slightly below support around their 20-day moving average. The subsequent breakdowns on Tuesday and Thursday proved particularly ugly, particularly when the latter move carried prices to their lowest level since late January.

Bulls can point to the fact that July futures ended the week above tentative chart support around 81.00 cents/pound. Moreover, a look at the December chart shows the new-crop contract ended the week significantly above support associated with its April low at 83.00 cents/pound.

December futures support in the 82.00-83.00 cent range does look rather substantial, but one has to wonder how well it will hold up if/when the July future drops below the 80-cent level. Much probably depends upon late-spring weather and the amount of cotton seed that gets planted in favorable conditions. At this point, we cannot claim to be particularly optimistic.